Chinese Businesses Are Beating Locals in Colombia — But Is That So Bad?

Chinese businesses may cause unemployment, but those jobs will be shifted into new sectors over time. (Los Andes)

TODAY COLOMBIA (Panampost.com) In the last two weeks, Chinese store owners in the San Victorino neighborhood of Bogotá have been victims of threats and intimidation from local shop owners. The atmosphere became quite heated during recent demonstrations that took place against the presence of Asians, some of whom have decided to close their shops for fear of being attacked.

Many Colombians claim Chinese people have snatched up a large share of the market, which has led them to bankruptcy.

“They have colonized stores in many cities,” said Juan Martín Duque, one of the leaders of the protest. “They arrive with lots of money, and pay the premiums to stay here with the locals. If this isn’t regulated it’s going to become a big problem.”

Chinese-owned stores tend to sell products at lower prices than Colombian ones. Shop owners admit this openly, and argue that it makes it difficult for them to compete.

The Chinese have explained that their better prices are a result of having contacts in their country, which allows them to get cheaper products. Also, Chinese couples sometimes have their stores open 365 days out of the year, taking turns managing it, because the business comes first.

It’s clear, then, that Chinese businesses are competitive enough and are hurting their Colombian competitors. But is that so bad? Should the state intervene and protect local vendors? Implementing barriers to the entry of Chinese goods damages the economy and undermines competition. New businesses with better prices not only benefits the customer, but also makes everyone else strive to lower their own prices and find new ways of marketing their own products.

When this topic gets discussed in relation to the free market, it always comes back to the harm done to producers and traders. But what often gets ignored is the thousands of consumers who benefit from the importation of cheap goods. The sale of Chinese products in Colombia helps, above all, the humble, middle-class family that now has a way to buy food, clothes, shoes, among other things, at a lower price.

When the business owners of San Victorino claim that they will be put out of work at the fault of the Chinese, it’s easy for everybody to feel compassion for the situation. But it’s important that an economic evaluation of this kind does not become personal, that we look at the bigger picture.

Let’s not focus on the losses, and instead turn our attention to the benefits, of which there are so many. Those arguing against free trade seem to forget that protectionist measures in the face of competition prevents a country from progressing. We cannot lock ourselves up by protecting domestic products when doing so would deprive us of the advantages of eating and living better as a result of foreign exchange.

It’s clear that all these changes create a dent in the employment rate, but it can’t be avoided when society has to advance — and even more when unemployment is only a temporary effect, as those jobs are not lost so much as shifted into different sectors. What should concern us is not whether these people have to change jobs, but if the necessary conditions will allow them to change jobs quickly. The shorter a person stays out of the workforce, the better.

Colombians have to learn to see that the benefits of foreign commerce improves society as a whole, and that even poor families, who might feel the blunt of this at first, will be helped more than they are hurt in the long run.

We can’t play Cain and Abel. The solution is not rooted in killing the virtuous, or harder working. The correct response is to improve yourself and try to compete, even if it will become harder and harder to do so as more foreign business arrives to Colombia.

The Chinese aren’t taking anything from anyone. On the contrary, they have increasingly begun to give back to the country. It’s not right to discriminate against them, especially since they have done so much good for Colombia’s economy. Instead of protesting for them to get out, we should be saying stay, Chinese, stay!